Djibouti ordered to pay DP World JV over $385m in port dispute

Doraleh Container Terminal, in which DP World owns 33%, is successful in London Court of International Arbitration.

The tribunal has ordered Djibouti to pay DCT $385 million plus interest for breach of its exclusivity by development of container facilities at Doraleh Multipurpose Terminal.

Doraleh Container Terminal (DCT), a Djibouti port operator owned 33.3 percent by Dubai-based DP World, has been successful in the London Court of International Arbitration proceeding against the Republic of Djibouti.

The tribunal has ordered Djibouti to pay DCT $385 million plus interest for breach of its exclusivity by development of container facilities at Doraleh Multipurpose Terminal, with further damages possible if Djibouti develops a planned Doraleh International Container Terminal with any other operator without the consent of DP World.

The tribunal has found that by developing new container port opportunities with China Merchants Holdings International Co Limited, a Hong-Kong based port operator, Djibouti has breached DCT’s rights under its 2006 concession agreement to develop a container terminal at Doraleh.

It added: “In respect of the development of the Djibouti Multipurpose Port facility, the facts are clear. At no stage before the decision was made to go ahead with that facility with China Merchants did... Djibouti... offer... DCT... the right to develop the proposed container facilities at the DMP.

"Djibouti was therefore in breach of clause 3.6.3 of the Concession Agreement”. China Merchants also operates a $3.5 billion free trade zone it developed pursuant to an agreement with Djibouti, in contravention of DP World’s exclusive right to develop and operate such a free zone under its own concession, which is the subject of other litigation proceedings."

The tribunal also ordered Djibouti to pay DCT $148 million for historic non-payment of royalties for container traffic not transferred to DCT once it became operational. Djibouti is also ordered to pay DCT’s legal costs.

This is the fifth substantial ruling in DCT and DP World’s favour on disputes relating to the Doraleh terminal.

DCT and DP World said they continue to seek to uphold their legal rights, following Djibouti’s unlawful efforts to expel DP World from Djibouti and transfer the port operation to Chinese interests.

Litigation against China Merchants also continues before the Hong Kong courts.

In February 2018, the Djibouti government cancelled DP World’s contract, signed in 2006, to run the Doraleh Container Terminal. DP World claimed this attempted renationalisation was illegal and began court proceedings, resulting in the the latest ruling.